PROTOCOL MODIFYING AND SUPPLEMENTING THE "CONVENTION BETWEEN JAPAN AND THE UNITED STATES OF BRAZIL FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME"

THE GOVERNMENT OF JAPAN AND THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL,

DESIRING TO MODIFY AND SUPPLEMENT THE "CONVENTION BETWEEN JAPAN AND THE UNITED STATES OF BRAZIL FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME", SIGNED AT TOKYO ON JANUARY 24, 1967,

HAVE AGREED AS FOLLOWS;

ARTICLE 1

PARAGRAPH (2) OF ARTICLE 9 SHALL BE DELETED AND REPLACED BY THE FOLLOWING:

"(2) HOWEVER, SUCH DIVIDENDS MAY BE TAXED IN THE CONTRACTING STATE OF WHICH THE COMPANY PAYING THE DIVIDENDS IS A RESIDENT, AND ACCORDING TO THE LAWS OF THAT CONTRACTING STATE, BUT THE TAX SO CHARGED SHALL NOT EXCEED 12.5 PER CENT OF THE GROSS AMOUNT OF THE DIVIDENDS."

ARTICLE 2

PARAGRAPH (2) OF ARTICLE 10 SHALL BE DELETED AND REPLACED BY THE FOLLOWING:

"(2) HOWEVER, SUCH INTEREST MAY BE TAXED IN THE CONTRACTING STATE IN WHICH IT ARISES, AND ACCORDING TO THE LAWS OF THAT CONTRACTING STATE, BUT THE TAX SO CHARGED SHALL NOT EXCEED 12.5 PER CENT OF THE GROSS AMOUNT OF THE INTEREST."

ARTICLE 3

1. PARAGRAPH (2) OF ARTICLE 11 SHALL BE DELETED AND REPLACED BY THE FOLLOWING:

"(2) HOWEVER, SUCH ROYALTIES MAY BE TAXED IN THE CONTRACTING STATE IN WHICH THEY ARISE, AND ACCORDING TO THE LAWS OF THAT CONTRACTING STATE, BUT THE TAX SO CHARGED SHALL NOT EXCEED:

(A) 25 PER CENT OF THE GROSS AMOUNT OF ROYALTIES ARISING FROM THE USE OF, OR THE RIGHT TO USE, TRADE MARKS;

(B) 15 PER CENT OF THE GROSS AMOUNT OF ROYALTIES ARISING FROM THE USE OF, OR THE RIGHT TO USE, COPYRIGHT OF CINEMATOGRAPH FILMS AND FILMS OR TAPES FOR RADIO OR TELEVISION BROADCASTING;

(C) 12.5 PER CENT IN ALL OTHER CASES."

2. PARAGRAPH (3) OF ARTICLE 11 SHALL BE DELETED AND REPLACED BY THE FOLLOWING:

"(3) THE TERM "ROYALTIES" AS USED IN THIS ARTICLE MEANS PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, ANY COPYRIGHT OF LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS AND FILMS OR TAPES FOR RADIO OR TELEVISION BROADCASTING, ANY PATENT, TRADE MARK, DESIGN OR MODEL, PLAN, SECRET FORMULA OR PROCESS, OR FOR THE USE OF, OR THE RIGHT TO USE, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE."

ARTICLE 4

SUB-PARAGRAPHS (A), (B) AND (C) OF PARAGRAPH (2) OF ARTICLE 22 SHALL BE DELETED AND REPLACED BY THE FOLLOWING:

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"(A) (I) WHERE A RESIDENT OF JAPAN DERIVES INCOME FROM BRAZIL WHICH MAY BE TAXED IN BRAZIL IN ACCORDANCE WITH THE PROVISIONS OF THIS CONVENTION, THE AMOUNT OF THE BRAZILIAN TAX PAYABLE IN RESPECT OF THAT INCOME SHALL BE ALLOWED AS A CREDIT AGAINST THE JAPANESE TAX IMPOSED ON THAT RESIDENT.  THE AMOUNT OF CREDIT, HOWEVER, SHALL NOT EXCEED THAT PART OF THE JAPANESE TAX WHICH IS APPROPRIATE TO THAT INCOME.

(II) WHERE THE INCOME DERIVED FROM BRAZIL IS A DIVIDEND PAID BY A COMPANY WHICH IS A RESIDENT OF BRAZIL TO A COMPANY WHICH IS A RESIDENT OF JAPAN AND WHICH OWNS AT LEAST 10 PER CENT EITHER OF THE VOTING SHARES OF THE COMPANY PAYING SUCH DIVIDEND, OR OF THE TOTAL SHARES ISSUED BY THAT COMPANY, THE CREDIT REFERRED TO IN (I) ABOVE SHALL TAKE INTO ACCOUNT THE BRAZILIAN TAX PAYABLE BY THE COMPANY PAYING THE DIVIDEND IN RESPECT OF ITS INCOME.

(B) (I) FOR THE PURPOSES OF THE CREDIT REFERRED TO IN SUB-PARAGRAPH (A) (I) ABOVE, BRAZILIAN TAX SHALL ALWAYS BE CONSIDERED AS HAVING BEEN PAID:

(A) AT THE RATE OF 25 PER CENT IN THE CASE OF DIVIDENDS TO WHICH THE PROVISIONS OF PARAGRAPHS (2) AND (5) OF ARTICLE 9 APPLY, AND OF ROYALTIES TO WHICH THE PROVISIONS OF SUB-PARAGRAPHS (B) AND (C) OF PARAGRAPH (2) OF ARTICLE 11 APPLY;

(B) AT THE RATE OF 20 PER CENT IN THE CASE OF INTEREST TO WHICH THE PROVISIONS OF PARAGRAPH (2) OF ARTICLE 10 APPLY.

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(II) FOR THE PURPOSES OF THE CREDIT REFERRED TO IN SUB-PARAGRAPH (A) ABOVE, BRAZILIAN TAX SHALL BE DEEMED TO INCLUDE THE AMOUNT OF BRAZILIAN TAX WHICH WOULD HAVE BEEN PAID IF THE BRAZILIAN TAX HAD NOT BEEN EXEMPTED OR REDUCED IN ACCORDANCE WITH THE SPECIAL INCENTIVE MEASURES DESIGNED TO PROMOTE ECONOMIC DEVELOPMENT IN BRAZIL, WHICH ARE EFFECTIVE ON MARCH 23, 1976, OR WHICH MAY BE INTRODUCED THEREAFTER IN THE BRAZILIAN TAX LAWS IN MODIFICATION OF, OR IN ADDITION TO, THE EXISTING MEASURES, PROVIDED THAT THE SCOPE OF THE BENEFIT ACCORDED TO THE TAXPAYER BY THOSE MEASURES SHALL BE AGREED TO BY THE GOVERNMENTS OF BOTH CONTRACTING STATES.

(C) IN THE APPLICATION OF THE PROVISIONS OF SUB-PARAGRAPH (B) (II) ABOVE, THERE SHALL NOT, IN ANY EVENT, BE DEEMED TO HAVE BEEN PAID AN AMOUNT OF TAX HIGHER THAN THAT WHICH, BUT FOR THE EXEMPTION OR REDUCTION OF TAX DUE TO THE SPECIAL INCENTIVE MEASURES, WOULD RESULT FROM THE APPLICATION OF THE BRAZILIAN TAX LAWS EFFECTIVE ON MARCH 23, 1976."

ARTICLE 5

THE TERM "UNITED STATES OF BRAZIL", WHEREVER USED IN THE AFORESAID CONVENTION, SHALL BE DELETED AND REPLACED BY THE TERM "FEDERATIVE REPUBLIC OF BRAZIL".

ARTICLE 6

1. THE PRESENT PROTOCOL SHALL BE RATIFIED AND THE INSTRUMENTS OF RATIFICATION SHALL BE EXCHANGED AT BRASILIA AS SOON AS POSSIBLE.

2. THE PRESENT PROTOCOL SHALL ENTER INTO FORCE ON THE THIRTIETH DAY AFTER THE DATE OF EXCHANGE OF INSTRUMENTS OF RATIFICATION AND SHALL HAVE EFFECT AS RESPECTS INCOME DERIVED DURING THE TAXABLE YEARS BEGINNING ON OR AFTER THE FIRST DAY OF JANUARY IN THE CALENDAR YEAR NEXT FOLLOWING THAT IN WHICH THE PRESENT PROTOCOL ENTERS INTO FORCE, PROVIDED THAT AS RESPECTS INCOME DERIVED DURING THE TAXABLE YEARS PRIOR TO THE ABOVE-MENTIONED TAXABLE YEARS, THE RELEVANT PROVISIONS OF THE AFORESAID CONVENTION SHALL CONTINUE TO APPLY.

3. THE PRESENT PROTOCOL SHALL CONTINUE IN FORCE AS LONG AS THE AFORESAID CONVENTION REMAINS IN FORCE.

IN WITNESS WHEREOF THE UNDERSIGNED, BEING DULY AUTHORIZED THERETO BY THEIR RESPECTIVE GOVERNMENTS, HAVE SIGNED THE PRESENT PROTOCOL.

DONE IN DUPLICATE AT TOKYO ON MARCH 23, 1976 IN THE JAPANESE, PORTUGUESE AND ENGLISH LANGUAGES, EACH TEXT BEING EQUALLY AUTHENTIC.  IN CASE OF ANY DIVERGENCE OF INTERPRETATION, THE ENGLISH TEXT SHALL PREVAIL.

FOR THE GOVERNMENT OF JAPAN:

KIICHI MIYAZAWA

FOR THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL:

HELIO DE BURGOS-CABAL

(BRAZILIAN NOTE)

EXCELLENCY, I HAVE THE HONOUR TO REFER TO THE CONVENTION BETWEEN OUR TWO COUNTRIES FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME WHICH WAS SIGNED ON JANUARY 24, 1967, AS AMENDED BY THE PROTOCOL MODIFYING AND SUPPLEMENTING THE CONVENTION SIGNED TODAY, AND TO CONFIRM, ON BEHALF OF THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL, THE FOLLOWING UNDERSTANDINGS REACHED BETWEEN THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL AND THE GOVERNMENT OF JAPAN:

1. WITH REFERENCE TO PARAGRAPH (2) OF ARTICLE 3 OF THE CONVENTION: WHERE AN INDIVIDUAL IS A RESIDENT OF BOTH CONTRACTING STATES, THE QUESTION SHALL BE SETTLED BY MUTUAL AGREEMENT TAKING INTO CONSIDERATION THE FOLLOWING RULES:

A) HE SHALL BE DEEMED TO BE A RESIDENT OF THE CONTRACTING STATE IN WHICH HE HAS A PERMANENT HOME AVAILABLE TO HIM.  IF HE HAS A PERMANENT HOME AVAILABLE TO HIM IN BOTH CONTRACTING STATES, HE SHALL BE DEEMED TO BE A RESIDENT OF THE CONTRACTING STATE WITH WHICH HIS PERSONAL AND ECONOMIC RELATIONS ARE CLOSEST (CENTRE OF VITAL INTERESTS);

B) IF THE CONTRACTING STATE IN WHICH HE HAS HIS CENTRE OF VITAL INTERESTS CANNOT BE DETERMINED, OR IF HE HAS NOT A PERMANENT HOME AVAILABLE TO HIM IN EITHER CONTRACTING STATE, HE SHALL BE DEEMED TO BE A RESIDENT OF THE CONTRACTING STATE IN WHICH HE HAS AN HABITUAL ABODE;

C) IF HE HAS AN HABITUAL ABODE IN BOTH CONTRACTING STATES OR IN NEITHER OF THEM, HE SHALL BE DEEMED TO BE A RESIDENT OF THE CONTRACTING STATE OF WHICH HE IS A NATIONAL;

D) IF HE IS A NATIONAL OF BOTH CONTRACTING STATES OR OF NEITHER OF THEM, THE COMPETENT AUTHORITIES OF THE CONTRACTING STATES SHALL SETTLE THE QUESTION BY MUTUAL AGREEMENT.

2. WITH REFERENCE TO SUB-PARAGRAPHS (C) AND (D) OF PARAGRAPH (3) OF ARTICLE 4 OF THE CONVENTION, THE TERM "SOLELY FOR THE PURPOSE OF STORAGE, DISPLAY OR DELIVERY" MEANS THE CASE WHERE NO SALES OPERATIONS ARE CARRIED ON IN THE COUNTRY IN WHICH SUCH FACILITIES ARE SITUATED.

3. WITH REFERENCE TO PARAGRAPH (3) OF ARTICLE 5 OF THE CONVENTION, THE TERM "EXPENSES WHICH ARE INCURRED FOR THE PURPOSES OF THE PERMANENT ESTABLISHMENT" MEANS ALL EXPENSES ACTUALLY INCURRED WHETHER IN THE CONTRACTING STATE IN WHICH THE PERMANENT ESTABLISHMENT IS SITUATED OR ELSEWHERE, REASONABLY ALLOCABLE TO SUCH PERMANENT ESTABLISHMENT, AND WHICH HAVE CONTRIBUTED TO EARNING OF PROFITS.

4. WITH REFERENCE TO PARAGRAPH (2) OF ARTICLE 7 OF THE CONVENTION, THE TWO GOVERNMENTS AGREE THAT, IF THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL, A POLITICAL SUBDIVISION OR LOCAL AUTHORITY THEREOF INTRODUCES ANY TAXES OF A CHARACTER SUBSTANTIALLY SIMILAR TO THE LOCAL INHABITANT TAXES OR THE ENTERPRISE TAX IN JAPAN AFTER THE DATE OF SIGNATURE OF THE CONVENTION, THE TWO GOVERNMENTS WILL CONSULT FOR THE PURPOSE OF AMENDING THE SAID PROVISIONS WITH A VIEW TO INCLUDING THOSE TAXES.

5. WITH REFERENCE TO PARAGRAPH (6) OF ARTICLE 9 OF THE CONVENTION, THE TERMS "TAX ON ACTIVITIES OF MINOR IMPORTANCE" AND "EXCESS REMITTANCE TAX" MEAN THE BRAZILIAN TAX IMPOSED UNDER ARTICLES 346 AND 348, RESPECTIVELY, OF THE BRAZILIAN INCOME TAX REGULATIONS AS CONSOLIDATED BY DECREE 76,186, OF SEPTEMBER 2, 1975.

6. WITH REFERENCE TO PARAGRAPH (6) OF ARTICLE 11 OF THE CONVENTION, IN DETERMINING WHETHER OR NOT THE ROYALTIES ARE A FAIR AND REASONABLE CONSIDERATION IN RESPECT OF THE RIGHTS FOR WHICH THEY ARE PAID, THE COMPETENT AUTHORITY OF A CONTRACTING STATE MAY TAKE INTO ACCOUNT THE PROVISIONS OF ITS OWN TAX LEGISLATION.

7. WITH REFERENCE TO SUB-PARAGRAPH (B)(II) OF PARAGRAPH (2) OF ARTICLE 22 OF THE CONVENTION:

(1) THE SPECIAL INCENTIVE MEASURES DESIGNED TO PROMOTE ECONOMIC DEVELOPMENT IN BRAZIL, WHICH ARE EFFECTIVE ON MARCH 23, 1976 ARE THOSE SET FORTH IN THE FOLLOWING ARTICLES OF ACTS OF BRAZIL;

(A) (I) ARTICLE 19 OF LAW NO.3692 OF DECEMBER 15, 1959, AS AMENDED BY ARTICLES 13 AND 14 OF LAW NO.4239 OF JUNE 27, 1963, ARTICLES 34 AND 35 OF LAW NO.5508 OF OCTOBER 11, 1968, ARTICLE 1 OF DECREE-LAW NO.1196 OF DECEMBER 23, 1971 AND ARTICLE 1 OF DECREE-LAW NO.1328 OF MAY 20, 1974 (REDUCION OF OR EXEMPTION FROM TAX ON INCOME RELATING TO THE INVESTMENT IN NORTHEASTERN REGION OF THE FEDERATIVE REPUBLIC OF BRAZIL)

(II) ARTICLE 34 OF LAW NO.3995 OF DECEMBER 14, 1961, AS AMENDED BY ARTICLE 18 OF LAW NO.4239 OF JUNE 27, 1963, ARTICLE 18 OF LAW NO.4869 OF DECEMBER 1, 1965, ARTICLE 38 OF LAW NO.5508 OF OCTOBER 11, 1968 AND ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974

(III) ARTICLE 97 OF LAW NO.5508 OF OCTOBER 11, 1968

(B) (I) ARTICLE 19 OF LAW NO.3692 OF DECEMBER 15, 1959, AS AMENDED BY ARTICLE 1 OF LAW NO.5174 OF OCTOBER 27, 1966, ARTICLES 22 AND 23 OF DECREE-LAW NO.756 OF AUGUST 11, 1969 AND ARTICLE 1 OF DECREE-LAW NO.1328 OF MAY 20, 1974 (REDUCTION OF OR EXEMPTION FROM TAX ON INCOME RELATING TO THE INVESTMENT IN AMAZONIAN REGION OF THE FEDERATIVE REPUBLIC OF BRAZIL)

(II) ARTICLE 1 OF LAW NO.4069-B OF JUNE 12, 1962, AS AMENDED BY ARTICLE 19 OF LAW NO.5174 OF OCTOBER 27, 1966

(III) ARTICLE 7 OF LAW NO.5174 OF OCTOBER 27, 1966, AS AMENDED BY ARTICLE 1 OF DECREE-LAW NO.756 OF AUGUST 11, 1969 AND ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974

(C) (I) ARTICLE 24 OF DECREE-LAW NO.55 OF NOVEMBER 18, 1966, AS AMENDED BY ARTICLES 2 AND 3 OF DECREE-LAW NO.1191 OF OCTOBER 27, 1971 (REDUCTION OF OR EXEMPTION FORM TAX ON INCOME RELATING TO THE INVESTMENT TO AN EXTERPRISE CONDUCTING HOTEL BUSINSS)

(II) ARTICLES 25 AND 26 OF DECREE-LAW NO.55 OF NOVEMBER 18, 1966, AS AMENDED BY ARTICLE 17 OF DECREE-LAW NO.157 OF FEBRUARY 10, 1967, ARTICLE 6 OF DECREE-LAW NO.756 OF AUGUST 11, 1969, ARTICLES 4 AND 5 OF DECREE-LAW NO.1191 OF OCTOBER 27, 1971 AND ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974 AND ARTICLES 4, 5, 6, 9 AND 11 OF DECREE-LAW NO.1439 OF DECEMBER 30, 1975

(D) ARTICLES 80, 81 AND 89 OF DECREE-LAW NO.221 OF FEBRUARY 28, 1967, AS AMENDED BY ARTICLE 1 OF DECREE-LAW NO.1217 OF MAY 9, 1972 AND ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974 (REDUCTION OF OR EXEMPTION FROM TAX ON INCOME RELATING TO THE INVESTMENT TO AN ENTERPRISE CONDUCTING FISHING BUSINESS)

(E) ARTICLE 1 OF LAW NO.5106 OF SEPTEMBER 2, 1966 AND ARTICLE 1 OF DECREE-LAW NO.1134 OF NOVEMBER 16, 1970, AS AMENDED BY ARTICLE 4 OF DECREE-LAW NO.1307 OF JANUARY 16, 1974 AND ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974 (REDUCTION OF TAX ON INCOME RELATING TO THE INVESTMENT TO AN ENTERPRISE CONDUCTING FOREST BUSINESS)

(F) ARTICLE 7 OF DECREE-LAW NO.770 OF AUGUST 19, 1969, AS AMENDED BY ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974 AND ARTICLE 1 OF DECREE-LAW NO.1408 OF JULY 7, 1975 (REDUCTION OF TAX ON INCOME RELATING TO THE INVESTMENT TO AN ENTERPRISE CONDUCTING AIRCRAFT BUSINESS)

(G) ARTICLE 4 OF DECREE-LAW NO.880 OF SEPTEMBER 18, 1969, AS AMENDED BY ARTICLE 1 OF DECREE-LAW NO.1345 OF SEPTEMBER 19, 1974 AND ARTICLE 11 OF DECREE-LAW NO.1376 OF DECEMBER 12, 1974 (REDUCTION OF TAX ON INCOME RELATING TO THE INVESTMENT IN THE STATE OF ESPIRITO SANTO)

(2) IF NEW LEGISLATION IS ENACTED IN BRAZIL WITHIN THE SCOPE OF THE SPECIAL INCENTIVE MEASURES MENTIONED IN THE SAID ARTICLE OR IN SUBSTITUTION FOR THE ARTICLES OF THE BRAZILIAN LEGISLATION ENUMERATED IN PARAGRAPH (1) ABOVE EFFECTIVE ON MARCH 23, 1976, THE GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL WILL INFORM THE GOVERNMENT OF JAPAN ON SUCH LEGISLATION AND THE TWO GOVERNMENTS WILL CONSULT FOR THE PURPOSE OF A NEW EXCHANGE OF NOTES WITH A VIEW TO INCLUDING THOSE MODIFICATIONS WHICH ARISE FROM THE ABOVE LEGISLATION.

8. THE UNDERSTANDINGS EFFECTED BY THE EXCHANGE OF NOTES DATED JANUARY 24, 1967 SHALL TERMINATE ON THE DATE OF THE ENTRY INTO FORCE OF THE PRESENT UNDERSTANDINGS, PROVIDED THAT AS RESPECTS INCOME DERIVED DURING THE TAXABLE YEARS PRIOR TO THOSE TO WHICH THE PROVISIONS OF THE AFORESAID PROTOCOL APPLY IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 2 OF ARTICLE 6 OF THE AFORESAID PROTOCOL, THE FORMER UNDERSTANDINGS SHALL CONTINUE TO APPLY.

9. THE PRESENT UNDERSTANDINGS SHALL HAVE EFFECT AS RESPECTS INCOME DERIVED DURING THE TAXABLE YEARS TO WHICH THE PROVISIONS OF THE AFORESAID PROTOCOL APPLY IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 2 OF ARTICLE 6 OF THE AFORESAID PROTOCOL.

I HAVE FURTHER THE HONOUR TO PROPOSE THAT THE PRESENT NOTE AND YOUR EXCELLENCY'S NOTE IN REPLY CONFIRMING THE FOREGOING UNDERSTANDINGS SHALL BE REGARDED AS CONSTITUTING AN AGREEMENT BETWEEN THE TWO GOVERNMENTS, WHICH WILL ENTER INTO FORCE ON THE DATE OF ENTRY INTO FORCE OF THE AFORESAID PROTOCOL.

I AVAIL MYSELF OF THIS OPPORTUNITY TO EXTEND TO YOUR EXCELLENCY THE ASSURANCE OF MY HIGHEST CONSIDERATION.

TOKYO, MARCH 23, 1976

HELIO DE BURGOS-CABAL AMBASSADOR EXTRAORDINARY AND PLENIPOTENTIARY OF THE FEDERATIVE REPUBLIC OF BRAZIL

HIS EXCELLENCY MR. KIICHI MIYAZAWA MINISTER FOR FOREIGN AFFAIRS OF JAPAN

(JAPANESE NOTE)

EXCELLENCY, I HAVE THE HONOUR TO ACKNOWLEDGE THE RECEIPT OF YOUR EXCELLENCY'S NOTE OF TODAY'S DATE, WHICH READS AS FOLLOWS:

"(BRAZILIAN NOTE)"

I HAVE FURTHER THE HONOUR TO CONFIRM THE FOREGOING UNDERSTANDINGS ON BEHALF OF THE GOVERNMENT OF JAPAN AND TO AGREE THAT YOUR EXCELLENCY'S NOTE AND THIS NOTE SHALL BE REGARDED AS CONSTITUTING AN AGREEMENT BETWEEN THE TWO GOVERNMENTS WHICH WILL ENTER INTO FORCE ON THE DATE OF ENTRY INTO FORCE OF THE AFORESAID PROTOCOL.

I AVAIL MYSELF OF THIS OPPORTUNITY TO EXTEND TO YOUR EXCELLENCY THE ASSURANCE OF MY HIGHEST CONSIDERATION.

TOKYO, MARCH 23, 1976

KIICHI MIYAZAWA MINISTER FOR FOREIGN AFFAIRS OF JAPAN

HIS EXCELLENCY MR. HELIO DE BURGOS-CABAL, AMBASSADOR EXTRAORDINARY AND PLENIPOTENTIARY OF THE FEDERATIVE REPUBLIC OF BRAZIL

　AGREED MINUTES

　The representatives of the Government of Japan and the Government of the Federative Republic of Brazil hereby record the following understandings which have been reached between the two Governments during the course of the negotiations for the conclusion of the Protocol modifying and supplementing the Convention between our two countries for the avoidance of double taxation with respect to taxes on income, which was signed today;

1.It is understood that the capitalized amounts of non-distributed profits, whether or not with issuance of shares, are considered as falling within dividends as defined in paragraph (4) of Article 9 of the Convention, and that accordingly the provisions of sub-paragraph (b) (i) of paragraph (2) of Article 22 of the Convention will apply to them, unless they are dividends referred to in paragraph (7) of Article 9 of the Convention.

2.It is understood that the amount of the Brazilian company tax destined to the Social  Integration Program established by the Complementary Law No.7 of 1970 is included in Brazilian tax referred to in paragraph (1) (a) of Article 1 of the Convention.

　Tokyo, March 23, 1976

　For the Government of Japan:
Kiichi Miyazawa

　For the Government of the Federative Republic of Brazil:
Helio de Burgos-Cabal